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The human capital perspective of economic transition in Russia


Ogloblin, Constantin G. (1999). The human capital perspective of economic transition in Russia. Master's thesis / Doctoral dissertation.


The dissertation attempts to develop and test empirically economic models that explain the earnings structures and patterns of returns to human capital in Russia's transition economy. Three aspects of the transitional labor market are examined: returns to human capital, the effects of the mass privatization, and the gender earnings differential. The study uses data from the Russia Longitudinal Monitoring Survey (RLMS). The model of labor market choice and earnings determination developed in the study reflects what the author calls "virtual employment," meaning the labor market arrangement that allows employers to use wage-arrears as a form of labor market flexibility. It is found that educational attainment is important in determining the probability of full-wage employment for both genders, while labor market experience is significant only for women. A factor that significantly increases chances of virtual employment is monopsony in the local labor market. In the private sector of the economy the chances of being paid in full are significantly higher than in the state sector, although firm ownership is less important in determining these chances than are industry and regional factors. A positive effect of the transition on returns to education is evident but modest and much of it results from higher chances for more educated workers to be employed for a full wage. The significance of labor market experience as a factor of earnings decreased markedly during the transition. The private sector tends to reward human capital better than the state sector. Overall, the human capital earnings premiums explain only a tiny fraction of the variation in earnings and are less important than interregional and inter-industry earnings differentials. The gender earnings ratio is calculated at 71.7%, and most of the difference is found to be attributable to occupational and industrial employment segregation by gender. It is argued that the lower pay in the "female" industries and occupations and the gender pay gap in general are determined by interaction of the institutional factors inherited from the Soviet past with the forces of the emerging market.

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Ogloblin, Constantin G.